This note is a part of my Zettelkasten. What is below might not be complete or accurate. It
is also likely to change often.
19th September, 2020
Microeconomics is the study of decisions under scarcity
These are notes from MITxMicromasters program in Data, Economics and development policy.
What is microeconomics?
- Microeconomics is the study of decisions under scarcity. It tries to understand and predict how individuals and firms make themselves as well off as possible in a constrained environment (constrained optimization).
Core Assumptions of Microeconomics
- Individuals maximize Utility with budget constraints
- Firms maximize profits subject to demand of consumers and input markets.
Three fundamental questions of economics
- What should be produced by society (in terms of goods and services)?
- How to produce those goods and services?
- Who gets those goods and services?
The answer to these questions defines the way society is organized.